Am I wrong in assuming 100 at the start of the first year 50% increase will be 150 in the second year and again 50% increase in the third year making it 225? So the net increase will be ((225-100)/100)*100

I think you are missing one more step. See image below

Your mistake is highlighted with Red line In the beginning of the sum = 100 After 1 year = 100 + (50% 0f 100) = 100 + 50 = 150 After 2 year = 150 + (50% 0f 150) = 150 + 75 = 225 After 3 year = 225 + (50% 0f 225) = 225 + 112.5 = 337.5 Therefore % change = (337.5-100) = 237.5% Answer Option: C

Year 1: 50% of the original salary Year 2: 50% * 1.5 = 75% (50% of the original salary + 50% of the rise salary) Year 3: 75% * 1.5 = 112.2% 50%+75%+112.5%= 237.5%

shibsriz@gmail.com wrote:Am I wrong in assuming 100 at the start of the first year 50% increase will be 150 in the second year and again 50% increase in the third year making it 225? So the net increase will be A 50% increase 3 years in a row means that the salary increases by 50% a total of 3 times. Let the starting salary = 100. 1st year increase = 100+ 50% of 100 = 100+50 = 150. 2nd year increase = 150 + 50% of 150 = 150+75 = 225. 3rd year increase = 225 + 50% of 225 = 225+112.5 = 337.5. Total increase = 337.5 - 100 = 237.5. Total percent increase = (total increase)/(starting salary) * 100 = (237.5/100) * 100 = 237.5%. The correct answer is C.

Hi Shibriz, It's good that you posted this question, since something like it will show up on Test Day and it's a question that a lot of people get wrong (and it's because they make 1 silly mistake). Each of the other posts in this string explains a way to approach the question (either by TESTing VALUES or doing math), so I won't rehash any of that here. When a question talks about an increase or decrease, there's always some kind of "starting value", so it's worth noting that on your pad. "START = _____" "Year 1 = " "Year 2 = " Etc. You know the strategy and you know how to do the math, so this is an issue of accuracy more than anything else. GMAT assassins aren't born, they're made, Rich